SPST-0153 Regulatory Capital Rules (2019) - Tailoring Final Rule 11-19-19

SUPPORTING STATEMENT

REGULATORY CAPITAL RULES

(OMB No. 3064-0153)

INTRODUCTION

This submission is being made in connection with a final rule published in the Federal Register with the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (FRB), and the Federal Deposit Insurance Corporation¹ (FDIC) (collectively, the agencies). The final rule revises the regulatory capital rule found at 12 C.F.R. part 324. In particular, the final rule requires a U.S. intermediate holding company subject to Category III standards to maintain a minimum supplementary leverage ratio of 3 percent given its size and risk profile. As a result, these intermediate holding companies would no longer be identified as “advanced approaches banking organizations” for purposes of the advanced approach disclosure respondent count.  However, the number of FDIC-supervised advanced approaches institutions remains at one and therefore the only changes to the burden associated with the current information collection titled, “Regulatory Capital Rules” (OMB No. 3064-0153), which expires on February 28, 2022, is the result of economic fluctuation and not the final rule.

A. JUSTIFICATION

1. Circumstances and Need

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Topic 326, Financial Instruments—Credit Losses,² which revises the accounting for credit losses under U.S. generally accepted accounting principles (U.S. GAAP). ASU No. 2016-13 introduces CECL and the term, purchased credit deteriorated assets, which replaces the term, purchased credit-impaired assets, and modifies the treatment of credit losses on available-for-sale debt securities.

In February 2019, the agencies adopted a final rule titled, “Regulatory Capital Rule: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations” (CECL).³ CECL revised the agencies’ regulatory capital rules to identify which credit loss allowances under the new accounting standard are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in the effect on regulatory capital that may result from the adoption of the new accounting standard. CECL amended certain regulatory disclosure requirements to reflect changes to U.S. GAAP.

The FDIC’s capital rule at 12 C.F.R. part 324⁴ contains disclosure and recordkeeping requirements associated with minimum capital requirements and overall capital adequacy standards for insured state nonmember banks, state savings associations, and certain subsidiaries of those entities. The data is used by the FDIC to evaluate capital before approving various applications by insured depository institutions, to evaluate capital as an essential component in determining safety and soundness, and to determine whether an institution is subject to prompt corrective action provisions. 

In particular, the capital rule (1) contains a common equity tier 1 minimum capital requirement, a minimum tier 1 capital requirement, and, for banking organizations subject to the advanced approaches capital rules, a supplementary leverage ratio that incorporates a broad set of exposures in the denominator measure; (2) places limits on a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of common equity tier 1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements; (3) contains conservative standards for including an instrument in regulatory capital; (4) provides for calculating risk-weighted assets to enhance risk sensitivity and address weaknesses identified over recent years; (5) includes alternatives to credit ratings, consistent with section 939A of the Dodd-Frank Act; (6) includes methodologies for determining risk-weighted assets for residential mortgages, securitization exposures, and equity exposures; (7) contains disclosure requirements that apply to top-tier banking organizations domiciled in the United States with $50 billion or more in total assets, including disclosures related to regulatory capital instruments; (8) includes advanced approaches risk-based capital rules consistent with Basel III and section 939A and section 171 of the Dodd-Frank Act; and (9) applies the market risk capital rules to state savings associations.

Under CECL, banking organizations subject to the disclosure requirements in section 63 of the capital rules are required to update their disclosures to reflect the adoption of CECL. For example, such banking organizations are required to disclose allowance for credit losses instead of allowance for loan and lease losses after the CECL adoption. For advanced approaches banking organizations, the agencies adopted similar revisions to Tables 2, 3, and 5 in section 173 of the capital rules to reflect the adoption of CECL. In addition, the agencies revised those tables for electing advanced approaches banking organizations to disclose two sets of regulatory capital ratios. One set reflects the banking organization’s capital ratios with the CECL transition provision and the other set reflects the banking organization’s capital ratios on a fully phased-in basis.

Final Rulemaking

As stated above, the final rule would require a U.S. intermediate holding company subject to Category III standards to maintain a minimum supplementary leverage ratio of 3 percent given its size and risk profile. As a result, these intermediate holding companies would no longer be identified as “advanced approaches banking organizations” for purposes of the advanced approach disclosure respondent count. 

2. Use of the Information Collected

The FDIC uses the data collected under the rule to fulfill its statutory obligations to adopt a risk-based capital requirement, determine whether an institution has elected to use the CECL transition provision, and assess the adequacy of a qualifying bank’s risk-based capital. The specific information collection requirements are as follows:

Minimum Regulatory Capital Ratios

Section _.3(d) of the agencies’ capital rules provide for termination and close-out netting across multiple types of transactions or agreements if the bank obtains a written legal opinion verifying the validity and enforceability of the agreement under certain circumstances and maintains sufficient written documentation of this legal review.

Section _.22(h)(2)(iii)(A) allows the use of a conservative estimate of the amount of a bank’s investment in the capital of unconsolidated financial institutions held through the index security with prior approval by the appropriate agency.

Standardized Approach

Section _.35(b)(3)(i)(A) of the agencies’ capital rules require, for a cleared transaction with a qualified central counterparty (QCCP), that a client bank apply a risk weight of 2 percent, provided that the collateral posted by the bank to the QCCP is subject to certain arrangements and the client bank has conducted a sufficient legal review (and maintains sufficient written documentation of the legal review) to conclude with a well-founded basis that the arrangements, in the event of a legal challenge, would be found to be legal, valid, binding and enforceable under the law of the relevant jurisdictions.

Section _.37(c)(4)(i)(E) requires that a bank have policies and procedures describing how it determines the period of significant financial stress used to calculate its own internal estimates for haircuts and be able to provide empirical support for the period used.

Section _.41(b)(3) allows for synthetic securitizations a bank’s recognition, for risk-based capital purposes, of a credit risk mitigant to hedge underlying exposures if certain conditions are met, including the bank’s having obtained a well-reasoned opinion from legal counsel that confirms the enforceability of the credit risk mitigant in all relevant jurisdictions. In addition, section _.41(c)(2)(i) requires that a bank support a demonstration of its comprehensive understanding of a securitization exposure by conducting and documenting an analysis of the risk characteristics of each securitization exposure prior to its acquisition, taking into account a number of specified considerations. Section .41(c)(2)(ii) requires on an on-going basis (no less frequently than quarterly), a bank must evaluate, review, and update as appropriate the analysis required under this section for each securitization exposure.

Section _.42(e)(2) addresses risk-weighted assets for securitization exposures and requires that a bank publicly disclose that is has provided implicit support to the securitization and the risk-based capital impact to the bank of providing such implicit support.

Section _.62(a) specifies a quarterly frequency for the disclosure of information in the applicable tables set out in section _.63 and, if a significant change occurs, such that the most recent reported amounts are no longer reflective of the bank’s capital adequacy and risk profile, it also would require the bank to disclose as soon as practicable thereafter, a brief discussion of the change and its likely impact. This section would allow for annual disclosure of qualitative information that typically does not change each quarter, provided that any significant changes are disclosed in the interim. Section _.62(b) requires that a bank have a formal disclosure policy approved by the board of directors that addresses its approach for determining the disclosures it makes. The policy is required to address the associated internal controls and disclosure controls and procedures. Section .62(c) requires a bank with total consolidated assets of $50 billion or more that is not an advanced approaches bank, if it concludes that specific commercial or financial information required to be disclosed under section _.62 is exempt from disclosure by the agency under the Freedom of Information Act (5 U.S.C. 552), to disclose more general information about the subject matter of the requirement and the reason the specific items of information have not been disclosed.

Section _.63(a) requires certain disclosures for each of the last three years beginning on the effective date of the rule for banks with total consolidated assets of $50 billion or more that are not advanced approaches banks, including qualitative and quantitative disclosures related to capital structure, capital adequacy, capital conservation buffer, general credit risk, counterparty credit risk-related exposures, credit risk mitigation, securitizations, certain equities, and interest rate risk for non-trading activities. In addition, section 63(b) requires quarterly disclosure of a bank’s common equity tier 1 capital, additional tier 1 capital, tier 2 capital, tier 1 and total capital ratios, including the regulatory capital elements and all the regulatory adjustments and deductions needed to calculate the numerator of such ratios; total risk-weighted assets, including the different regulatory adjustments and deductions needed to calculate total risk-weighted assets; regulatory capital ratios during any transition periods, including a description of all the regulatory capital elements and all regulatory adjustments and deductions needed to calculate the numerator and denominator of each capital ratio during any transition period; and a reconciliation of regulatory capital elements as they relate to its balance sheet in any audited consolidated financial statements.

Tables 1 through 10 to section _.63 set forth qualitative and quantitative disclosure requirements for scope of application, capital structure, capital adequacy, capital conservation buffer, credit risk, counterparty credit risk-related exposures, credit risk mitigation, securitizations, equities not subject to Subpart F of the rule, and interest rate risk for non-trading activities.

Advanced Approaches

Sections _.121 and _.122 require that a covered institution adopt a written implementation plan that addresses how it will comply with the framework’s qualification requirements, including incorporation of a comprehensive and sound planning and governance process to oversee the implementation efforts. The institution must also develop processes for assessing capital adequacy in relation to an organization’s risk profile. It must have in place internal risk rating and segmentation systems for wholesale and retail risk exposures, including comprehensive risk parameter quantification processes and processes for annual reviews and analyses of reference data to determine its relevance. It must document its process for identifying, measuring, monitoring, controlling, and internally reporting operational risk; verify the accurate and timely reporting of risk-based capital requirements; and monitor, validate, and refine its advanced systems.

Section _.123 requires an institution to notify its Federal supervisor of changes to advance systems and requires submission of a plan for returning to compliance with qualification requirements.

Section _.124 requires an institution to notify its primary Federal supervisor when it makes a material change to its advanced systems and to develop an implementation plan after any mergers.

Section _.132(b)(2)(iii)(A) addresses counterparty credit risk of repo-style transactions, eligible margin loans, and OTC derivative contracts and allows a bank, with the FDIC’s prior written approval, to calculate haircuts (H_s and H_fx) using its own internal estimates of the volatilities of market prices and foreign exchange rates. To receive FDIC approval to use its own internal estimates, a bank must satisfy the minimum quantitative standards outlined in the section.

Section _.132(b)(3) provides that with the prior written approval of the agency, an institution may estimate EAD for a netting set using a VaR model that meets certain requirements.

Section _.132(d)(1) allows the use of the internal models methodology to determine EAD for counterparty credit risk for derivative contracts with prior written approval. Section .132(d)(1)(iii) allows the use of the internal models methodology for derivative contracts, eligible margin loans, and repo-style transactions subject to a qualifying cross-product netting agreement with prior written approval. Section _.132(d)(2)(iv) provides that for risk-weighted assets using the internal models methodology (IMM), a bank uses an internal model to estimate the expected exposure (EE) for a netting set and then calculates EAD based on that EE. A bank must calculate two EEs and two EADs (one stressed and one unstressed) for each netting as outlined in this section. Section _.132(d)(3)(vi) requires that a bank, in order to obtain FDIC approval to calculate the distributions of exposures upon which the EAD calculation is based, must demonstrate to the satisfaction of the FDIC that it has been using for at least one year an internal model that broadly meets the minimum standards, with which the bank must maintain compliance. In addition, the bank must have procedures to identify, monitor, and control wrong-way risk throughout the life of an exposure. The procedures must include stress testing and scenario analysis. Section _.132(d)(3)(viii) requires that, when estimating model parameters based on a stress period, the bank must use at least three years of historical data that include a period of stress to the credit default spreads of the bank’s counterparties. The bank must review the data set and update the data as necessary, particularly for any material changes in its counterparties. The bank must demonstrate at least quarterly that the stress period coincides with increased CDS or other credit spreads of the institution’s counterparties. The bank must have procedures to evaluate the effectiveness of its stress calibration that include a process for using benchmark portfolios that are vulnerable to the same risk factors as the institution’s portfolio. The FDIC may require the institution to modify its stress calibration to better reflect actual historic losses of the portfolio. Section _.132(d)(3)(ix) requires that a bank subject its internal model to an initial validation and annual model review process. The model review should consider whether the inputs and risk factors, as well as the model outputs, are appropriate. As part of the model review process, the institution must have a backtesting program for its model that includes a process by which unacceptable model performance will be determined and remedied. Section _.132(d)(3)(x) requires that a bank must have policies for the measurement, management and control of collateral and margin amounts. Section _.132(d)(3)(xi) requires that a bank have a comprehensive stress testing program that captures all credit exposures to counterparties, and incorporates stress testing of principal market risk factors and creditworthiness of counterparties.

Section _.141 addresses operational criteria for recognizing the transfer of risk. Section _.141(b)(3) requires a well-reasoned legal opinion confirming the enforceability of the credit risk mitigant in all relevant jurisdictions. Section _.141(c)(1) and .141(c)(2)(i) require an advanced approaches bank to demonstrate its comprehensive understanding of a securitization exposure for each securitization exposure by conducting an analysis of the risk characteristics of a securitization exposure prior to acquiring the exposure and document such analysis within three business days after acquiring the exposure. Section _.141(c)(2)(ii) requires that, on an ongoing basis (no less frequently than quarterly), a bank must evaluate, review, and update as appropriate the analysis required under this section for each securitization exposure.

Section _.142, which outlines the capital treatment for securitization exposures, requires that a bank publicly disclose that it has provided implicit support to the securitization and the regulatory capital impact to the bank of providing such implicit support.

Section _.153 provides that a bank must receive prior written approval from its primary Federal supervisor before it can use the Internal Models Approach.

Section 172 specifies that each consolidated bank must publicly disclose its total and tier 1 risk-based capital ratios and their components.

Section 173 requires a bank that is an advanced approaches bank to make the qualitative and quantitative disclosures described in Tables 1 to 12. The bank must make these disclosures publicly available for each of the last three years (that is, twelve quarters) or such shorter period beginning on the effective date of this subpart E. Table 4 to section _.173 addresses disclosures related to capital conservation and countercyclical buffers; Table 5 to section _.173 addresses general disclosures related to credit risk; Table 9 to section _.173 addresses disclosures related to securitizations; and Table 12 to section _.173 addresses disclosures related interest rate risk for non-trading activities.

Banking organizations subject to the disclosure requirements in section 63 of the capital rules are required to update their disclosures to reflect the adoption of CECL. For example, such banking organizations are required to disclose allowance for credit losses instead of allowance for loan and lease losses after CECL adoption. For advanced approaches banking organizations, the agencies revised Tables 2, 3, and 5 in section 173 of the capital rules to reflect the adoption of CECL. In addition, the agencies revised those tables for electing advanced approaches banking organizations to disclose two sets of regulatory capital ratios. One set reflects such banking organization’s capital ratios with the CECL transition provision and the other set reflects the banking organization’s capital ratios on a fully phased-in basis.

Final Rulemaking

As stated above, final rule requires a U.S. intermediate holding company subject to Category III standards to maintain a minimum supplementary leverage ratio of 3 percent given its size and risk profile. As a result, these intermediate holding companies would no longer be identified as “advanced approaches banking organizations” for purposes of the advanced approach disclosure respondent count. 

3. Use of Technology to Reduce Burden

The agencies use information technology to reduce burden on institutions and decrease costs to insured depository institutions and the agencies. Insured depository institutions are required to store data in an electronic format allowing timely retrieval for analysis, reporting and disclosure purposes. Institutions are also encouraged to provide information for public disclosure on their websites.

4. Efforts to Identify Duplication

The information collected is institution-specific. The information is used to determine a bank’s election to use the CECL transition provision, and fully assess the adequacy of a qualifying bank’s risk-based capital. Substantially all of the information collected is not otherwise available.

5. Minimizing the Burden on Small Entities

This collection does not have a significant impact on a substantial number of small entities. In particular, according to Call Report data as of December 31, 2018, there were 3,489 FDIC-supervised institutions. Only one of these FDIC-supervised institutions is affected by the regulatory capital rule and does not have total assets of less than $600 million therefore meeting the Small Business Administration’s definition of a “small entity.”

6. Consequence of Less Frequent Collections

The FDIC would not be able to adequately monitor capital levels and ensure safety and soundness in covered institutions if the information were collected less frequently.

7. Special Circumstances

The rule requires banks to maintain data used to estimate risk parameters. For wholesale exposures, default data must be maintained for at least 5 years, loss severity data must be maintained for at least 7 years, and exposure amount data must be maintained for at least 7 years. Retail segment exposure default, loss severity and exposure amount data must be maintained for at least five years.

In addition to the requirements for a minimum number of years that data must be maintained, the default, loss severity, and exposure amount data must include periods of economic downturn conditions, or the bank must adjust its estimates of risk parameters to compensate for the lack of data from such periods.

Maintenance of data for these periods is necessary for banks to conduct adequate statistical analysis to support the associated risk parameters used to calculate the risk-based capital requirement.

8. Consultation with Persons Outside the FDIC

On May 24, 2019, the agencies published the proposed rule in the Federal Register (84 FR 24296). No comments were received with respect to the Paperwork Reduction Act.

9. Payment or Gift to Respondents

None.

10. Confidentiality

Any information deemed to be of a confidential nature would be exempt from public disclosure in accordance with the provisions of the Freedom of Information Act (5 U.S.C. 552).

11. Information of a Sensitive Nature

This collection contains no sensitive information.

12. Burden Estimates

Summary of Annual Burden and Internal Cost
BASEL III Advanced Approaches: RECORDKEEPING and DISCLOSURE	Type of Burden	Estimated Number of Respondents	Estimated Time per Response	Frequency of Response	Total Annual Estimated Burden
Implementation plan -- Section _.121(b): Ongoing	Recordkeeping	1	330.00	On Occasion	330
Documentation of advanced systems -- Section _.122(j): Ongoing	Recordkeeping	1	19.00	On Occasion	19
Systems maintenance -- Sections _.122(a), _123(a), _.124(a): Ongoing	Recordkeeping	1	27.90	On Occasion	28
Supervisory approvals -- Sections_.122(d)-(h), _.132(b)(3), _.132(d)(1), _.132(d)(1)(iii): Ongoing	Recordkeeping	1	16.82	On Occasion	17
Control, oversight and verification of systems -- Sections _.122 to _.124: Ongoing	Recordkeeping	1	11.05	On Occasion	11
(CCR) -- Section _.132(b)(2)(iii)(A): One-time	Recordkeeping	1	80.00	On Occasion	80
(CCR) -- Section _.132(b)(2)(iii)(A): Ongoing	Recordkeeping	1	16.00	On Occasion	16
(CCR) -- Section _.132(d)(2)(iv): One-time	Recordkeeping	1	80.00	On Occasion	80
(CCR) -- Section _.132(d)(2)(iv): Ongoing	Recordkeeping	1	40.00	On Occasion	40
(CCR) -- Section _.132(d)(3)(vi): One-time	Recordkeeping	1	80.00	On Occasion	80
(CCR) -- Section _.132(d)(3)(viii): One-time	Recordkeeping	1	80.00	On Occasion	80
(CCR) -- Section _.132(d)(3)(viii) Ongoing	Recordkeeping	1	10.00	Quarterly	40
(CCR) -- Section _.132(d)(3)(ix): One-time	Recordkeeping	1	40.00	On Occasion	40
(CCR) -- Section _.132(d)(3)(ix): Ongoing	Recordkeeping	1	40.00	On Occasion	40
(CCR) -- Section _.132(d)(3)(x): One-time	Recordkeeping	1	20.00	On Occasion	20
(CCR) -- Section _.132(d)(3)(xi): One-time	Recordkeeping	1	40.00	On Occasion	40
(CCR) -- Section _.132(d)(3)(xi): Ongoing	Recordkeeping	1	40.00	On Occasion	40
(OC) -- Section _.141(b)(3), _.141(c)(1), _.141(c)(2)(i)-(ii), _.153:: One-time	Recordkeeping	1	40.00	On Occasion	40
(OC) -- Section _.141(c)(2)(i)-(ii): Ongoing	Recordkeeping	1	10.00	Quarterly	40
Sections _.142 and _.171: Ongoing	Disclosure	1	5.78	On Occasion	6
(CCB and CCYB) -- Section _.173, Table 4 (Securitization) -- Section _.173, Table 9 (IRR) -- Section_.173, Table 12: Ongoing	Disclosure	1	25.00	Quarterly	100
(CCB and CCYB) -- Section _.173, Table 4 (Securitization) -- Section _.173, Table 9 (IRR) -- Section _.173, Table 12: One-time	Disclosure	1	200.00	On Occasion	200
(Capital Structure) -- Section_.173, Table 2: Ongoing	Disclosure	1	2.00	Quarterly	8
(Capital Structure) -- Section_.173, Table 2: One-time	Disclosure	1	16.00	On Occasion	16
(Capital Adequacy) -- Section_.173, Table 3: Ongoing	Disclosure	1	2.00	Quarterly	8
(Capital Adequacy) -- Section _.173, Table 3: One-time	Disclosure	1	16.00	On Occasion	16
(CR) --Section_.173, Table 5: Ongoing	Disclosure	1	12.00	Quarterly	48
(CR) -- Section _.173, Table 5: One-time	Disclosure	1	96.00	On Occasion	96
SUBTOTAL: One-time Recordkeeping and Disclosure					788
SUBTOTAL: Ongoing Recordkeeping and Disclosure					791
TOTAL RECORDKEEPING and DISCLOSURE					1,579
Minimum Regulatory Capital Ratios: RECORDKEEPING	Type of Burden	Estimated Number of Respondents	Estimated Time per Response	Frequency of Response	Total Annual Estimated Burden
(CCR Operational Requirements) -- Sections _.3(d) and_.22(h)(2)(iii)(A): Ongoing	Recordkeeping	3,489	16.00	On Occasion	55,824
SUBTOTAL: One-time Recordkeeping					0
SUBTOTAL: Ongoing Recordkeeping					55,824
TOTAL RECORDKEEPING					55, 824
Standardized Approach: RECORDKEEPING and DISCLOSURE	Type of Burden	Estimated Number of Respondents	Estimated Time per Response	Frequency of Response	Total Annual Estimated Burden
(QCCP) -- Section _.35(b)(3)(i)(A): One-time	Recordkeeping	1	2.00	On Occasion	2
(QCCP) -- Section _.35(b)(3)(i)(A): Ongoing	Recordkeeping	3,489	2.00	On Occasion	6,978
(CT) -- Section _.37(c)(4)(i)(E): One-time	Recordkeeping	1	80.00	On Occasion	80
(CT) -- Section _.37(c)(4)(i)(E): Ongoing	Recordkeeping	3,489	16.00	On Occasion	55,824
(SE) -- Section _.41(b)(3) and _.41(c)(2)(i): One-time	Recordkeeping	1	40.00	On Occasion	40
(SE) -- Section _.41(c)(2)(ii): Ongoing	Recordkeeping	3,489	2.00	On Occasion	6,978
(S.E.) -- Section _.42(e)(2), (C.R.) Sections_.62(a),(b),& (c), (Q&Q) Sections_.63(a) & (b): One-time	Disclosure	1	226.25	On Occasion	226
(S.E.) -- Section _.42(e)(2), (C.R.) Sections_.62(a),(b),& (c), (Q&Q) Sections_.63(a) & (b) and _.63 Tables: Ongoing	Disclosure	1	131.25	Quarterly	525
SUBTOTAL: One-time Recordkeeping and Disclosure					348
SUBTOTAL: Ongoing Recordkeeping and Disclosure					70,305
TOTAL RECORDKEEPING and DISCLOSURE					70,653
ESTIMATED COST TO RESPONDENTS ASSOCIATED WITH HOURLY BURDEN
Total One-Time Burden Hours					1,136
Total Ongoing Burden Hours					126,920
TOTAL BURDEN HOURS					128,056
Total Estimated Ongoing Cost (128,056 hours * $73/hour)					$9,348,088

Annualized Cost of Internal Hourly Burden:

128,056 hours x $73 per hour⁵ = $9,348,088.

Estimated Category of Personnel Responsible for Complying with the PRA Burden	Total Estimated Hourly Compensation	Estimated Weights	Estimated Total Weighted Labor Cost Component
Executives and Managers*	$122	0%	$0
Lawyers**	$156	0%	$0
Compliance Officer***	$63	50%	$32
IT Specialists†	$89	0%	$0
Financial Analysts††	$83	50%	$42
Clerical‡	$32	0%	$0
Total Estimated Weighted Average Hourly Compensation Rate		100%	$73
Source: Bureau of Labor Statistics: "National Industry-Specific Occupational Employment and Wage Estimates: Depository Credit Intermediation Sector: hourly 75th percentile wage" (May 2017), Employer Cost of Employee Compensation (December 2018), Consumer Price Index (December 2018).
Note: The wage information reported by the BLS in the Specific Occupational Employment and Wage Estimates does not include health benefits and other non-monetary benefits. According to the December 2018 Employer Cost of Employee Compensation data compensation rates for health and other benefits are 33.7 percent of total compensation. Additionally, the wage has been adjusted for inflation according BLS data on the Consumer Price Index for Urban Consumers (CPI-U) so that it is contemporaneous with the non-wage compensation statistic. The inflation rate was 3.59 percent between May 2017 and December 2018.
*     Occupation (SOC Code): Management Occupations (110000)
**   Occupation (SOC Code): Lawyers, Judges, and Related Workers(231000)
*** Occupation (SOC Code): Compliance Officers(131041)
†     Occupation (SOC Code): Computer and Mathematical Occupations (150000)
††   Occupation (SOC Code): Financial Analyst (132051)
‡    Occupation (SOC Code): Office and Administrative Support Occupations(430000)

13. Capital, Start-Up and Maintenance Costs

None.

13. Estimated Annual Cost to the Federal Government

None. The reports are processed by existing FDIC staff.

13. Reason for Change in Burden

There is a 216 decease in overall annual burden. This reduction is attributed to economic fluctuation (a decrease in the number of respondents) and not the final rule.

13. Publication

The information is not published.

17. Display of Expiration Date

Not applicable.

17. Exceptions to Certification

None.

B. STATISTICAL METHODS

Not applicable.

1 Changes to Applicability Thresholds for Regulatory Capital and Liquidity Requirements; Final Rule, 84 FR 59230 (Nov. 1, 2019). The FDIC issued the final rule under its authorities under Sections 12 U.S.C. 1828 and 1831o of the Federal Deposit Insurance Act.

2 ASU No. 2016-13 introduces ASC Topic 326 that covers measurement of credit losses on financial instruments and includes three subtopics: (i) Subtopic 10 Financial Instruments—Credit Losses—Overall; (ii) Subtopic 20: Financial Instruments—Credit Losses—Measured at Amortized Cost; and (iii) Subtopic 30: Financial Instruments—Credit Losses—Available-for-Sale Debt Securities.

3 “Regulatory Capital Rule: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations,” 84 FR 11879 (Mar. 29, 2019).

4 In 2014, the FDIC revised its capital rule in accordance with Section 171 of the Dodd-Frank Act which requires the agencies to establish minimum risk-based and leverage capital requirements.

5 The wage information reported by the BLS in the Specific Occupational Employment and Wage Estimates does not include health benefits and other non-monetary benefits. According to the December 2018 Employer Cost of Employee Compensation data compensation rates for health and other benefits are 33.7 percent of total compensation. Additionally, the wage has been adjusted for inflation according BLS data on the Consumer Price Index for Urban Consumers (CPI-U) so that it is contemporaneous with the non-wage compensation statistic. The inflation rate was 3.59 percent between May 2017 and December 2018.

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